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Westcoast Energy Inc. Application for the Spruce Ridge Program (NEB Decision GH-001-2018)

Link to decision summarized

Westcoast System Extension – Tolling Methodology


In this decision, the NEB considered Westcoast Energy Inc., carrying on business as Spectra Energy Transmission (“Westcoast”)’s application pursuant to section 58 of the National Energy Board Act (“NEB Act”) and section 43 of the National Energy Board Onshore Pipeline Regulations (“OPR”) for authorization to construct and operate the Spruce Ridge Program (the “Project”). The NEB found that it was in the public interest to approve Westcoast’s application to construct and operate the Project.

The Project

The Project included two natural gas pipeline loops (Chetwynd Loop and Aitken Creek Loop, approximately 25 kilometres (“km”) and 13 km, respectively, in length and the associated facilities which included the addition of two new compressor units at two existing compressor stations (“CS2” and “CS N5”), and minor modifications at two compressor stations (“CS N5” and “CS 16”).

The proposed Project would allow Westcoast to provide incremental firm transportation service from receipt points along the Fort Nelson Mainline, Aitken Creek Pipeline, and Fort St. John Mainline. Westcoast received requests for additional Zone 3 firm transportation service to accommodate increasing levels of production from the Montney Formation in northeast British Columbia.

Consultation and Land Matters

The NEB was satisfied that Westcoast proposed suitable mitigation to address the Project’s potential land-related effects during the design, construction, and operation of the Project. The NEB found the route, as proposed, was acceptable.

The NEB acknowledged Westcoast’s efforts to minimize both the potential area of environmental disturbance of the Project, as well as avoidance of existing municipal development, by proposing a right-of-way that bypassed the District of Chetwynd, and otherwise was largely contiguous with existing linear disturbances.

The NEB found that the requested right-of-way and temporary work space land requirements were necessary to allow for the safe and efficient construction and operation of the Project. The NEB found that Westcoast’s anticipated requirements for permanent and temporary land rights were acceptable.

The NEB noted that for the portion of the Project of Mr. Lasser’s lands, there was still an opportunity to confirm methods and timing of construction. Therefore, the NEB imposed Condition 12 (Landowner-specific Consultation Update) to ensuring that Westcoast continued to consult with Mr. Lasser, as well as allowing for the participation of Mr. Lasser in planning Project construction activities on his lands.

Matters of Concern to Indigenous People

The NEB found that there was adequate consultation and accommodation for the purpose of the NEB’s decision on the Project. The NEB also found that any potential Project impacts on the rights and interests of affected Indigenous peoples were not likely to be significant and can be effectively addressed.

With respect to consultation, the NEB found that:

(a)     potentially affected Indigenous peoples were appropriately identified, given the information available at the time, and provided information about the Project; and

(b)     Westcoast would continue to consult with Indigenous peoples, including all Indigenous Intervenors, to learn more about their interests and concerns, and address issues they may raise throughout the lifecycle of the Project.

The NEB remained concerned about the cumulative effects of projects, including this Project, on the current use of lands and resources for traditional purposes by Indigenous peoples. However, the NEB found that the cumulative effects of the Project on traditional land and resource use in the Project area would be effectively mitigated by the proposed conditions and commitments.

Engineering Matters

The NEB found that the general design of the Project facilities was appropriate for the intended use and that the facilities will be constructed in accordance with accepted standards for design, construction, and operation. The NEB reminded Westcoast to apply for leave to open pursuant to section 47 of the NEB Act, prior to the facilities being placed in operation.

Environment Matters

Environmental and Socio-Economic Assessment

The NEB’s Filing Manual guides proponents on what should be included in the Environmental and Socio-Economic Assessment (“ESA”). The Filing Manual notes that an applicant is not expected to provide extensive descriptions of features of the environment that would not be impacted by the Project and that the goal is to: provide information with sufficient detail to identify Project-environment interactions; determine the significance of Project effects; and formulate appropriate mitigation measures and monitoring Programs. In some cases, the effects of a project on certain environmental elements can be predicted and appropriate mitigation proposed regardless of the level and detail of baseline information provided.

The NEB found that Westcoast’s ESA methodology was acceptable, based on the following:

(a)     Westcoast included sufficient baseline information that was supported by a description of the methodology used and the rationale for that methodology; and

(b)     Westcoast’s ESA properly analyzed and characterized the level of significance of the potential adverse environmental effects of the Project as required by the Filing Manual.

Environmental Impacts

The NEB found that:

(a)     the mitigation to be implemented by Westcoast would minimize the environmental effects of the Project;

(b)     Westcoast made reasonable efforts to obtain the latest critical habitat mapping from Environment and Climate Change Canada to plan its Project; and

(c)     the Project was not likely to result in any additional adverse impacts to caribou within the Graham and Pine River Local Population Unit.

The NEB noted that Westcoast would conduct post-construction monitoring and that a Post-Construction Monitoring Program (“PCMP”) was a key tool towards ensuring that potential adverse effects will be effectively mitigated and where issues are identified, adaptive management will be implemented to address them. To be satisfied that post-construction monitoring was thorough and effective and that reports would be developed and filed, the NEB imposed Condition 20 (Post-Construction Environmental Monitoring Reports  which set out requirements for Westcoast’s post construction monitoring. The NEB included, as part of Condition 20, a requirement that Westcoast develop a Wetland Functions Monitoring Program.

The NEB imposed Condition 17 requiring offsets and a Caribou Habitat Offset Measures Plan (“OMP”). The OMP must include a final confirmation of the footprint and if combined with another ongoing Westcoast offset program, a demonstration of how the measures are included and how they will be effective.

Economic Feasibility

The NEB found that Westcoast demonstrated a need for the Project and the applied for facilities were likely to be used at a reasonable level over their economic life.

The NEB found that the natural gas resources in the Montney Formation represented adequate supply to support the Project.

Tolling Methodology

Westcoast requested an order from the NEB pursuant to Part IV of the NEB Act, affirming that the cost of the Project would be included in the T-North (Zone 3) cost of service and tolled on a rolled-in basis.

The NEB found Westcoast’s proposed tolling methodology, using rolled-in cost of service, was appropriate for this Project and would result in just and reasonable tolls. The rolled-in tolling methodology was consistent with Westcoast’s existing practice for system expansions. Therefore, the NEB found that the tolling methodology reasonably satisfied section 62 of the NEB Act, which requires that the same tolls should apply to all shippers using the same transportation services over the same facilities.

In assessing a proposed tolling methodology, the NEB must be satisfied that a proposed tolling methodology would not result in any unjust discrimination in tolls, service or facilities. The NEB also considered whether the resulting tolls would be just and reasonable, and whether, under substantially similar circumstances and conditions concerning all traffic of the same description carried over the same route, the tolls would be charged equally to all persons at the same rate.

Westcoast’s Zone 3 cost of service was allocated on the basis of contract demand volumes only, this method of tolling is referred to as postage stamp tolls. Westcoast explained that there are two postage stamp tolls in Zone 3:

(a)     the short haul toll for deliveries to distribution utilities connected to Zone 3 that serve northern communities and for gas movements of 75 km or less other than to the Alliance or NGTL systems; and

(b)     the long-haul toll for all other gas movements in Zone 3.

Summary

The NEB found that it was in the public interest to approve Westcoast’s application to construct and operate the Project.

The NEB granted an order pursuant to section 58 of the NEB Act exempting:

(a)     the applied for facilities from the application of paragraphs 30(1)(a) and (b) and section 31 of the NEB Act; and

(b)      the pipeline tie-ins from the application of section 47 of the NEB Act.

The NEB also granted an order pursuant to subsection 48(2.1) of the NEB Act exempting certain welds for the auxiliary and utility piping systems from the 100 percent non-destructive examination requirement in section 17 of the OPR for the auxiliary and utility systems.

Further, the NEB granted Westcoast an order pursuant to Part IV of the NEB Act affirming that the cost of the Spruce Ridge Program will be included in the Transmission North (Zone 3) cost of service and tolled on a rolled-in basis.

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